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Storage Market Picks Up As the Economy Falters

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The storage systems market turned in a surprisingly strong performance in the first quarter, according to IDC, topping the fourth quarter's nearly 10 percent growth rate by a full percentage point (see Is Storage Recession-Proof?).

IDC reported today that worldwide external disk storage systems factory revenues grew 10.8 percent in the first quarter from the same quarter a year ago, totaling $4.9 billion. IDC's Worldwide Disk Storage Systems Quarterly Tracker noted that the total disk storage systems market (internal and external combined) grew to $6.7 billion, up 8.4 percent from the first quarter of 2007. Total disk storage systems capacity shipped reached 1,642 petabytes, up 51.8 percent.

And all that occurred as oil prices soared, financial markets seized up, and a venerable Wall Street firm (Bear Stearns) failed.

"Businesses are continuing to move forward, and data is the lifeline of the business," IDC research manager Brad Nisbet told Enterprise Storage Forum. "If the business is moving forward, then storage is something that can't be put off. They need a place to put all that data."

"It's clear that while organizations may be feeling squeezed in their overall IT budgets, the investments being made to store growing volumes of critical business data adequately are increasing," Nisbet said in a statement. "We see a long road of positive drivers fueling the opportunities for disk storage systems in the form of increased retention requirements and long-term data protection goals."

Dell Takes iSCSI Lead

One part of the report wasn't too much of a surprise: Dell (NASDAQ: DELL) officially took the lead in the iSCSI market, thanks to its acquisition of EqualLogic (see EqualLogic Gives Dell a Boost).

Dell led the iSCSI market with a 27.7 percent revenue share, followed by NetApp (NASDAQ: NTAP) with 20.5 percent. Nisbet said IDC estimated that iSCSI sales hit $845 million last year and $295 million in the first quarter of 2008, a 67.5 percent growth rate for the first quarter. He estimated that EqualLogic added $34 million to Dell's first-quarter sales. As a private company a year ago, EqualLogic had $23.8 million in sales, according to a company SEC filing.

"EqualLogic has helped there, but Dell had already made a push and aggressive focus on iSCSI even before the acquisition," said Nisbet.

Nisbet said Dell's interest in iSCSI is as part of a "holistic virtualization solution" that also includes storage.

"Users obviously love VMware and server virtualization, but many out there believe it's the storage that's holding them back," he said, forcing users to work harder to map virtualized servers onto storage.

Dell has been most aggressive in its pursuit of the iSCSI market, but Nisbet said NetApp's NAS/NFS approach is another valid way to address server virtualization storage needs.

IDC said the NAS market grew 15.5 percent in the first quarter, led by EMC (NYSE: EMC) with a 36 percent revenue share and followed by NetApp with a 31.6 percent share.

EMC maintained its lead in the external disk storage systems market with a 21.4 percent revenue share (see table below), followed by HP (NYSE: HPQ) and IBM (NYSE: IBM) with 12.4 percent and 11.5 percent, respectively. Dell, NetApp and Hitachi ended the quarter in a statistical tie to round out the top five, with 9.3 percent, 9.0 percent and 8.9 percent revenue share, respectively. Among the top five suppliers, Hitachi and Dell posted the strongest year-over-year revenue growth during the first quarter, at 19.1 percent and 17.5 percent, respectively.

The total network disk storage market (NAS combined with Open SAN) posted 14.9 percent year-over-year growth in the first quarter to more than $3.6 billion in revenues. EMC continues to lead the total network storage market with 26.4 percent revenue share, followed by NetApp and HP in a statistical tie at 12 percent each.

The Open SAN market grew 14.7 percent year over year. EMC led with a 23.6 percent revenue share, followed by HP with 14.1 percent.

Natalya Yezhkova, research manager for storage systems at IDC, stated that "Even segments that have been declining for quarters, including external direct-attach storage and JBOD, showed positive performance to start the year. This break in trends is attributable to the growing diversity of storage customers, including small and medium-sized businesses and content-centric customers, whose storage needs differ from those of the traditional customer base."

 

Top 5 Vendors
Worldwide External Disk Storage Systems Factory Revenue, First Quarter 2008

(Revenues are in millions)
 
VendorQ1 2008
revenue
 
Market shareQ1 2007
revenue
Market shareRevenue
growth
EMC$1,03921.4%$91220.8%14%
HP$60012.4%$57513.1%4.4%
IBM$56011.5%$54512.4%2.7%
Dell$4509.3%$3838.7%17.5%
NetApp$4359.0%$3878.8%12.4%
Hitachi$4338.9%$3648.3%19.1%
Others$78216.1%$74517.0%5.0%
 
All vendors$4,858100%$4,383100%10.8%
Source: IDC, June 2008

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